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Tax Law

Peer-to-Peer Car Rentals Subject to South Carolina Sales Tax

In a recent private letter ruling, the South Carolina Department of Revenue concluded that a motor vehicle rental company is responsible for remitting sales tax on short-term vehicle rentals entered into through its online peer-to-peer rental program. Applying South Carolina’s statutory definition of “gross proceeds of sales,” which includes the proceeds of sales through a marketplace by a marketplace facilitator, the Department found that the peer-to-peer short-term vehicle rentals in South Carolina are subject to sales tax. Specifically, the Department found that the company is a marketplace facilitator within the state’s statutory definition because of its website and mobile application where third parties advertise and rent vehicles. Therefore, the Department concluded that the company, as a marketplace facilitator, must remit sales tax on short-term vehicle rentals entered into through its online peer-to-peer rental program.

SC Private Letter Ruling No. 20-2.